Have equity in your home? Want a lower payment? An appraisal from Timely Appraisal Services can help you get rid of your PMI.
It's widely known that a 20% down payment is accepted when getting a mortgage. Considering the risk for the lender is often only the remainder between the home value and the sum due on the loan, the 20% adds a nice cushion against the expenses of foreclosure, selling the home again, and typical value variationson the chance that a purchaser doesn't pay.
During the recent mortgage boom of the last decade, it was common to see lenders taking down payments of 10, 5 or often 0 percent. How does a lender handle the increased risk of the low down payment? The answer is Private Mortgage Insurance or PMI. PMI takes care of the lender in case a borrower doesn't pay on the loan and the value of the property is lower than what is owed on the loan.
PMI can be expensive to a borrower on the grounds that the $40-$50 a month per $100,000 borrowed is compiled into the mortgage monthly payment and generally isn't even tax deductible. Unlike a piggyback loan where the lender takes in all the costs, PMI is profitable for the lender because they obtain the money, and they receive payment if the borrower doesn't pay.
Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.
How home buyers can prevent bearing the expense of PMI
The Homeowners Protection Act of 1998 obligates the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan equals 78 percent of the primary loan amount. The law promises that, upon request of the home owner, the PMI must be released when the principal amount reaches only 80 percent. So, keen homeowners can get off the hook ahead of time.
Because it can take countless years to reach the point where the principal is only 20% of the initial loan amount, it's essential to know how your home has grown in value. After all, all of the appreciation you've gained over the years counts towards removing PMI. So why pay it after your loan balance has fallen below the 80% mark? Despite the fact that nationwide trends forecast decreasing home values, understand that real estate is local. Your neighborhood might not be reflecting the national trends and/or your home could have secured equity before things settled down.
An accredited, licensed real estate appraiser can help home owners understand just when their home's equity goes over the 20% point, as it's a tough thing to know. It's an appraiser's job to understand the market dynamics of their area. At Timely Appraisal Services, we know when property values have risen or declined. We're experts at identifying value trends in Quinlan, Hunt County and surrounding areas. When faced with data from an appraiser, the mortgage company will most often drop the PMI with little trouble. At that time, the homeowner can relish the savings from that point on.
Want to learn more about PMI and the Homeowners Protection Act? Click this link: